The Zacks Analyst Blog Highlights: Baxter International, NuVasive, Hill-Rom Holdings, LM Ericsson Telephone and Becton, Dickinson
CHICAGO, Jan. 23, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Baxter International (NYSE: BAX), NuVasive Inc. (Nasdaq: NUVA), Hill-Rom Holdings, Inc. (NYSE: HRC), Becton, Dickinson and Company (NYSE: BDX) and LM Ericsson Telephone Company (Nasdaq: ERIC).
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Here are highlights from Tuesday's Analyst Blog:
Earnings Preview: Baxter
Baxter International (NYSE: BAX) is set to report its fourth-quarter 2012 results before the opening bell on Thursday, Jan 24. Let's see how things are shaping up prior to the announcement.
In the last quarter, the company did not post any earnings surprise reflecting indifferent performance by the company.
Factors to Consider This Past Quarter
The news regarding Baxter still remains somewhat mixed. On the positive side, Baxter's focus on life-sustaining products which are not commoditized, partly insulate it from an economic downturn. The company is able to generate recurring revenues, and consistent cash flow, due to its focus on chronic diseases. Among other positive factors, Baxter retains a strong product pipeline with several products in late-stage clinical development.
On the flip side, despite resilience in certain sub-segments, we are concerned about relative stagnation in sales, a slightly somber outlook for hospital spending and tightening of reimbursement.
Improved execution has lifted sentiment somewhat toward Baxter. It is a good bet for value investors willing to wait as fundamentals improve further.
Our proven model does not conclusively show that Baxter is likely to beat earnings estimates this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to happen. This is not the case here as you will see below.
Zacks Earnings ESP: The Most Accurate estimate stands at $1.25, while the Zacks Consensus Estimate is pegged at $1.26. This comes to a difference of -0.79%.
Zacks Rank #3 (Hold). Baxter's Zacks Rank #3 (Hold) lowers the predictive power of ESP. The Zacks Rank #3 together with negative ESP earnings makes surprise prediction difficult.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows they have the right ingredients to post an earnings beat this quarter:
NuVasive Inc. (Nasdaq: NUVA), Earnings ESP of 72.73% and Zacks Rank #1 (Strong Buy)
Hill-Rom Holdings, Inc. (NYSE: HRC), Earnings ESP of 2.27% and Zacks Rank #2 (Buy)
Becton, Dickinson and Company (NYSE: BDX), Earnings ESP of 3.25% and Zacks Rank #2 (Buy).
Ericsson Acquires French Company
LM Ericsson Telephone Company (Nasdaq: ERIC) recently announced its intention to acquire the Telecom & Media subsidiary of France-based consulting company, Devoteam. This acquisition is in line with Ericsson's strategy of expanding its IT capabilities.
Devoteam is a leading player in the information and communications technology consulting across Europe, Middle East and Africa.
The company's core competency lies in consulting and systems integration for operations and business support, service delivery platforms and applications, IP Multimedia Subsystems, IP and radio networks and TV. This deal also includes the acquisition of TV SmartVision operations.
This deal is also consistent with Devoteam's 2015 strategic plan to become a niche player and focus more on the company's value propositions.
Prior to this deal, Ericsson has been a key business partner for Devoteam in the United Kingdom and the Mediterranean regions. Therefore, this acquisition is expected to further strengthen the alliance between the two companies moving forward.
The deal is expected to be complete by second quarter of 2013 whereby all the 400 professionals from Devoteam's subsidiary will be joining Ericsson. However, the closure is subject to regulatory compliance and procedures.
Ericsson seeks to gain expertise in complex, strategic and technical consulting assignments through the acquisition, which will enable it to enhance customer value. Apart from this, Ericsson has completed two major acquisitions of Telcordia and Conceptwave in the recent past.
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